make, use, or sell manufactured articles or parts thereof, when such articles or parts are made, used, or sold as repair parts.

We will be greatly obliged if the foregoing will be given careful consideration when final draft of a bill is made.

Mr. LANHAM. The next witness is Mr. Sylvan Gotshal, who has been assigned 10 minutes.

STATEMENT OF SYLVAN GOTSHAL, MEMBER OF THE FIRM OF WEIL, GOTSHAL & MANGES, ATTORNEYS, OF NEW YORK

Mr. GOTSHAL. My name is Sylvan Gotshal; I am an attorney and a member of the firm of Weil, Gotshal & Manges, of New York.

I have been quite active as you know, Mr. Chairman, on this subject for some 10 or 12 years and have followed this problem from the time of the old Vestal bill until the present time.

I have here a memorandum in which I have tried to incorporate a summary of this entire subject from the time when you and I first began our discussions, some 10 or 12 years ago, and I would like to submit that memorandum into the record, if you please.

Mr. LANHAM. If there is no objection, it will be placed in the record.

(The memorandum above referred to will be found at the conclusion of the statement by Mr. Gotshal.)

Mr. Gotshal. There are just one or two points I want to bring up to supplement and enlarge on as to this particular memorandum, and they are these:

I represent the silk and rayon concerns who have been, I think, the most active individuals in this country over the past 10 years in their efforts to obtain design protection by law. We sponsored the old Vestal bill. The old Vestal bill almost passed, as you know; it passed the House and failed in the Senate as a result of the shortness of the time, more than anything else. It tried to cover too many subjects.

We later sponsored the bill and I was fortunate enough to work with Dr. Fenning on this bill, H. R. 5859. We still feel that bill, with a few modifications we have put into our memorandum, is the logical solution of this problem. But under no circumstances are we sponsoring the so-called Vandenberg amendment. Our objections to the Vandenberg amendment result from practical experience in our own efforts to deal with design protection by voluntary agreement. I think we have the outstanding success in this field by our voluntary action in this Industrial Design Registration Bureau in New York. In this bureau, some 300 concerns register their designs and they find that this thing can work and that it is entirely practical, but two things are required and those two things are not incorporated in the Vandenberg amendment.

One is the principle of search. When we first began to study this problem, we thought it would be possible to apply the ordinary copyright rules, that is, merely to file something and get a prima facie right. But we do not think that is feasible here, because the complexities would be too great. We feel there must be search. That is number one.

No. 2 is that in the Vandenberg amendment there is no provision that notice of copyright should not have to be put on each repeat

design. You understand on a piece of silk there may be a thousand repeats of the design on 1 yard of that cloth, and you can see how utterly unfeasible it would be to put notice of copyright on each repeat, and under this law, or under the Duffy bill, or the Sirovich bill, under the general copyright bill, the law of this country would be there would have to be notice of copyright on each repeat of that design.

It is for those two reasons that we strongly object to the Vandenberg amendment and urge you to give most careful consideration to the Sirovich bill. That is H. R. 5859.

There is just one other thing I want to say. I have studied this problem a great deal as to its application in other countries. It is a peculiar thing, but every other foremost industrial nation has design protection by law and it is a most extraordinary thing that this country has never seen fit to adopt it. We have found a practical solution in New York City, and I have brought Miss Blunt here to give you in a few minutes her own experience, and this shows you how such a thing will work. The rest of my time I would like to use to have Miss Blunt tell you about the practical application of the principles you are considering.

(The following was submitted for the record by Mr. Gotshal:)

MEMORANDUM IN SUPPORT OF LEGISLATION FOR DESIGN PROTECTION

(With particular reference to: (1) The so-called Vandenberg amendment (S. 3047) to the so-called Duffy copyright bill; (2) the bill to provide protection by registration of designs for textiles and other materials, introduced by Congressman Sirovich in the first session of the Seventy-fourth Congress, H. R. 5859.)

To the HONORABLE WILLIAM I. SIROVICH,

Chairman, Committee on Patents of the House of Representatives,

Washington, D. C.

HONORABLE SIR: This memorandum is submitted to you by the most active group in the United States over the past years for securing Federal legislation for the protection of designs, namely, the several hundred concerns representing millions of dollars of capital investment, employing thousands of people manufacturing piece goods composed of silk and/or rayon or other mixtures, and bearing on their surface or woven into the material various designs. As there are so many bills pending before your committee, we wish to state at the outset exactly what our position is with reference to each bill:

1. S. 3047, the so-called Vandenberg amendment to the Duffy copyright bill, we definitely oppose for the reasons hereinafter expressed.

2. H. R. 11420, the new Sirovich general copyright bill, we are not particularly interested in this except insofar as you may later in your wisdom decide to amend such bill in order to include the essential elements of the design protection bill hereinafter referred to.

3. H. R. 5859, we believe that this bill is the only one now pending before you which satisfactory solves the problem, that the problem justifies a separate law and that this bill should be enacted into law with a few modifications which we will explain later.

The case for adequate protection for original designs by national legislation has been thoroughly considered by you and your Committee in several public hearings in the past. It will be our attempt in this memorandum simply to cover the salient points in connection with the subject and to outline the developments that have taken place since the last hearings before you.

SUMMARY OF LEGISLATIVE ACTIVITY UP TO THE PRESENT TIME

The agitation for design protection legislation began about the year 1905. The previous peak of activity was represented by the old Vestal bill on this

subject which passed the House and only failed in passage in the Senate by reason of the fact that it was not reached on the calendar at the end of the session. Thereafter, at the next session of Congress, legislation in approximately the same form as the present H. R. 5859, the Sirovich design protection bill, was introduced because objections had been raised to the phraseology of the Vestal bill to the effect that it was too complicated and that it attempted to cover too wide a variety of subjects. The Sirovich design protection bill therefore embodies all the essential features and has none of the drawbacks of the old Vestal bill.

The National Retail Dry Goods Association was the chief opponent of the Vestal bill. Section 5 of the Sirovich design protection bill H. R. 5859 is the result of joint conferences between retailers and manufacturers, and, as a consequence, the retail business withdrew at the last hearing their opposition to this legislation.

Later, at the instance of certain concerns manufacturing articles other than textiles, such as furniture, etc., the so-called Vandenberg amendment to the Duffy general copyright bill was drawn. This amendment does not contain any of the provisions which were agreed upon between retailers and textile manufacturers.

OBJECTIONS TO THE VANDENBERG AMENDMENT S. 3047 BY OUR GROUP

Much as we desire proper design protection legislation, we are of the opinion that the Vandenberg amendment will simply serve to increase chaotic conditions due to insufficient or no protection rather than to improve them. A reading of this amendment shows that no effort whatsoever has been made to incorporate those provisions for search and notice which were the result of years of effort and discussion between manufacturers and retailers and which in their combined judgment are essential to bring about a workable piece of legislation. The so-called Vandenberg amendment gives to the owner of the design after copyrighting an immediate prima facie right without search that the owner of any other copyright would have. When one considers the thousands of industrial designs produced each year, the similar nature of these designs, particularly where certain style trends are involved, it is inconceivable to see how any law could function which does not provide in the first instance for some quick search.

Again, the proposed Vandenberg amendment is not practical in the case of designs used in textiles for the reason that the law as drawn would necessitate the repetition of the notice of copyright of the letter C in a circle (C) wherever there is a repeat of the design. In the case of textiles where very often there may be hundreds of repeats in a single yard of goods, it is selfevident that the letter (C) upon repeat would spoil the effect.

We disapprove of the Vandenberg amendment primarily because it is too superficial an attempt to cover such an important field and because it fails to include the numerous elements for mutual protection embodied in the Sirovich design protection bill. If the Vandenberg amendment is considered at all, however, in any event an amendment should be added at the appropriate place in section 18 of S. 3047 as follows:

"Provided further, That where a unit of sale embodies repetition of a design, one notice of copyright placed on or attached to each unit shall be sufficient."

NECESSITY OF PROPER LEGISLATION SUCH AS THE SIROVICH DESIGN PROTECTION BILL (H. R. 5859) FROM THE STANDPOINT OF PUBLIC WELFARE AND THE SILK AND/OR RAYON-MANUFACTURING INDUSTRY

The silk and/or rayon industry is one of the most important industries of our country. During the last 20 years new conditions have arisen which have changed the method of doing business. Prior to the war, its products were sold in large quantities directly to the distributor and the manufacturer was able to control the supply in such a way as to earn a fair profit and protect himself and the industry from unfair practices. Today, due the growth of the dress-manufacturing industry and the refusal of the average woman to make her own clothing, the silk manufacturer's product is now sold to a great extent to the dress manufacturer instead of to the retail distributor. Sales are no longer in large quantities, but as a rule in comparatively small quantities, thereby adding considerable expense for handling, examining, and selling

of smaller units. Simultaneously, there have grown up within this industry, certain concerns more or less irresponsible, having no large investment in plant or equipment, making their merchandise on a cost-plus commission basis, and who simply steal the original ideas of the larger and more responsible units. The large manufacturer with his investment, effort, and expense, producing a standard article for the public, may spend hundreds of thousands of dollars upon furnishing the public novel style ideas and, before he is able to reap the benefit, the pirate filches his idea and furnishes to the public an inferior product at a price which makes it impossible for the large manufacturer to procure a fair profit from his own product.

The situation has disastrous consequences for all concerned except the pirate. For the manufacturer-he cannot lay out a production program for the reason that he does not know when the design may be stolen. If he were able to lay out a large production program knowing that his design was protected, he would be able, by mass production, to furnish the article to the public at a cheaper price. As to the public-it suffers because there is foistd upon it constantly an inferior product at a price in excess of its true value, whereas if the manufacturer were able to control the product against copying, the public would get a standard article at a fair price.

Naturally, as the result of inability to protect designs, the designer in this country has suffered greatly and is unable to procure a fair wage. Also, originality in art in this country is far behind that of other countries where it has been protected, indicating that other countries realized the business and public necessity for such legislation. We find that practically every foreign nation of importance has a law of this type, such as the law of July 14-19. 1909, in France, and the Patents and Designs Act of 1907 in England. We find that practically everyone agrees upon the necessity for this legislation.

AS TO THE INSUFFICIENCY OF EXISTING LAWS

The Design Patent Law is completely ineffective to protect us for the following reasons:

(a) Originality from the patent standpoint means pure originality as well as novelty from every standpoint and furthermore means that the same rules apply to a design as apply to a mechanical invention.

It is obvious to anyone that such a law fails to cover what the artistic and business world needs most, namely, originality in the sense that by application of artistic and intellectual effort a design has been applied and embodied in a new or novel way to a manufactured product. Moreover, this need is further frustrated by the consideration of noncompetitive designs, as, the refusal of a textile design because of alleged similarity to wallpaper, etc. Because of the requirement for originality in the "inventive" sense, it is said that 90 percent of the applications for design patents are refused upon the first search.

(b) The time consumed in obtaining a design patent generally makes it absolutely valueless.

The method of the patent office in each design is to cause a thorough search to be made before action. This, together with the fact that the patent office is overloaded with work and lacking in man power, means that it has generally taken weeks before letters patent for a design are issued. Even though the Design Patent Office has been speeded up over the past couple of years, primarily due to the untiring and most helpful efforts of your chairman, it is simply not practical and cannot be because of the fleeting nature and popularity of designs and because of the inability to protect designs based solely on novelty. Protection afforded by the patent law is illusory, for by the time the patent has been issued, the design has been copied, and its term of valu has expired. During the past years, the Commissioner of Patents has made every possible effort to cooperate with those interested in the protection of designs by hastening, so far as he was able, the granting of the patents. With all the good will in the world, however, he is subject to limitations of an antiquated law. The Design Patent Law was conceived at a time when the evils of piracy had not yet forced themselves upon the country and was never meant to cover such commercial necessities as exist today.

Foremost authorities on this subject have always considered it of doubtful value and have condemned it as to its propriety. particularly in the light of present day commercial necessities. First of all, it is necessary to file three forms, petition, oath, and specification for each application for letters patent and each of these forms must bear the signature of the originator of the design.

that is, the artist. The procuring of signatures for the necessary papers presents many practical difficulties. In addition to the three forms specified, the buyer of the design must also secure from the originator an assignment of interest in the patent before the Patent Office will recognize the manufacturer's rights in the patent. Further, there must be attached to the application a special drawing by special process in black and white of the design. Since in the majority of designs more than one color is used, this means that the original appearance of the drawing must be adapted to portray the various color values into black and white. It can readily be seen that adequate protection against a colorable imitation, a common basis of design piracy, is difficult.

Many people have the idea that once a patent is issued by the Patent Office, their rights are inviolate. Certainly the issuance of a patent affords certain very definite rights which enable the owner to give a great deal of trouble to a copier. But until a court has passed upon a patent, it is impossible to guarantee what effect the mere issuance has. Broadly stated, the patent confers merely a prima facie right. It is most difficult to obtain injunctions, however, and damages are not easy to calculate; consequently the owner of the patent has little practical redress, particularly when it is realized that the issue will not come to trial until after the design has from a fashion standpoint become of little value.

(c) The cost involved in securing letters patent for designs is prohibitive running between $25 and $100 per design depending upon the complicated nature of same and the extent of any interference.

This cost, when you consider that in the silk industry alone, close to 100,000 designs have been registered with the Industrial Design Registeration Bureau of that industry, makes it absolutely prohibitive to the individual manufacturer who may wish to register several hundred designs in a season, not knowing which will prove valuable.

The present copyright law has been held by the courts to be inapplicable.

(a) By court interpretation, the present law requires a notice of the copyright to be put upon each repeat of the design. De Jongs v. Kessler ·(253 U. S. 115).

This is commercially impossible in the case of textiles, where in one yard of goods, the repeat may appear many times and where the notice upon each repeat would completely destroy the merchantability and commercial use of the product.

(b) The present copyright law requires that the thing copyrighted be of artistic value and by judicial interpretation "artistic nature" excludes designs for industrial purposes which are utilitarian in character. Kemp & Beatley, Inc. v. Hirsch (34 Fed. (2d) 291).

The courts have held that there is no common law right to an original design. Therefore, no protection exists on the ground of unfair competition. Cheney Bros. v. Doris Silk Corporation (35 Fed. (2d)).

The Court, in discussing the evil, said: "True it would seem as though the plaintiff has suffered a grievance for which there should be a remedy, perhaps by an amendment of the copyright law, assuming that this does not already cover the case, which is not urged here. It seems a lame answer in such a case to turn the injured party out of court, but there are larger issues at stake than his redress. Judges have only a limited power to amend the law; when the subject has been confided to a legislature, they must stand aside even though there be an hiatus in completed justice.”

The Federal Trade Commission fails to offer adequate protection for two

reasons:

(a) By the time that a cease-and-desist order could be secured, the design would be out of style.

(b) The case of Federal Trade Commission v. Klesner (280 U. S. 19) has been cited as authority for the proposition that the Commission has no power to intervene in matters of this kind.

EFFORTS OF THE SILK AND RAYON INDUSTRY TO HELP ITSELF DUE TO INEFFECTIVENESS OF THE LAW

Upon realizing that the law did not help, the Silk Association of America, Inc., formed a design registration bureau on August 20, 1928, and later the activities of the bureau were taken over and controlled by a separate corporation under the guidance of members of the association, known as the Design Protection Association, Inc.: later the textile design registration bureau was